MicroStrategy’s bold corporate Bitcoin treasury is under intense strain as the cryptocurrency’s price slump pushes the company’s holdings deep into unrealized loss territory. The firm, which has rebranded as Strategy, now shows a paper loss of approximately $11.2 billion after Bitcoin dropped to around $63,157, well below its average acquisition price of $75,699 per coin. The entire reserve of 843,706 BTC, acquired at a total cost of $63.8 billion, currently has a market value of about $52.6 billion.
The mounting pressure extends beyond the Bitcoin balance sheet. Strategy’s variable-rate perpetual preferred stock, traded under the ticker STRC, has fallen to $94.6, dipping below its $100 par value. The downturn has prompted warnings from long-time Bitcoin critic and gold advocate Peter Schiff, who predicted that the company will be forced to suspend dividend payments on STRC. Schiff argues that the heavy reliance on Bitcoin’s volatile price leaves the firm without sufficient cash flow to meet its obligations if the crypto market continues to slide. Such a move, he contends, would crater STRC’s price and likely trigger class-action lawsuits from investors who claim they were misled about the stock’s risks.
Schiff’s intervention has reignited debate about the sustainability of Michael Saylor’s leveraged accumulation model. If dividends are halted, holders of the preferred shares – which were marketed as a steady income instrument tied to the company’s Bitcoin strategy – could argue they were victims of deceptive advertising. The specter of litigation adds another layer of uncertainty for an investment vehicle already under duress.
Saylor, however, has dismissed the bearish narrative. Posting on X, he characterized the sell-off as a temporary capital rotation, noting that ETF outflows and a surge of $400 billion into AI infrastructure have diverted funds from Bitcoin. “This is not a Bitcoin impairment. Volatility creates opportunity,” Saylor stated, doubling down on his conviction that the downturn is cyclical. His defense is critical to maintaining investor confidence, as any perceived crack in the treasury model could increase the cost of future capital raises just when Strategy most needs to defend its position.
The situation is further complicated by a recent small Bitcoin sale – the first since 2022 – and by massive ETF outflows totaling $4.4 billion over 13 trading days. Standard Chartered analyst Geoffrey Kendrick suggested that a substantial repurchase by Strategy in the coming days could be interpreted as a market bottom signal, referencing a similar pattern from 2022. For now, investors are left weighing Schiff’s dire predictions against Saylor’s assurances, while watching whether STRX and the broader crypto market can stabilize.
